- Analysts forecast Bitcoin reaching $54,000 in early 2024 and as high as $160,000 after the halving.
- A spot ETF in the United States is likely to appear in January, but may face a number of hurdles.
A number of catalysts, in tandem with historical patterns, could ‘catapult’ the first cryptocurrency to $160,000 in a 2024 bull market, according to a CryptoQuant report cited by CoinDesk.
Bitcoin’s drivers
Analysts expect demand for digital gold from several spot ETF in the United States, the upcoming halving, and a rally in stock markets after cuts to U.S. interest rates could lift the asset’s price to at least $54,000 in the near term.
Among the main positive factors cited by analysts are:
- growth in on-chain activity;
- halving of the block reward;
- macroeconomic prospects;
- spot Bitcoin ETF;
- rising liquidity stablecoins.
CryptoQuant expects the U.S. Federal Reserve to cut rates in 2024 as inflation continues to ease. A lower-rate environment has historically supported the rise of risk assets such as tech stocks and cryptocurrencies, the report’s authors add.
Nevertheless, analysts warned of potential near-term price pullbacks, citing a sizable amount of unrealised profit among investors.
“There are some risks of a price correction, given that short-term Bitcoin holders are realising a high P&L, which has historically preceded a downturn,” the analysts said.
Since the start of the year, Bitcoin has risen by about 160%. According to CoinGecko, at the time of writing the coin was trading at $43,840 with a market capitalisation of $858 billion.
Earlier, MicroStrategy founder Michael Saylor predicted that Bitcoin would either fall to zero or rise to $1 million.
When to expect the ETF?
QCP’s analysts suggested that less than three weeks remain before approval of a spot Bitcoin exchange-traded fund. The product would be announced after the close on January 5 or during January 8–10.
“As the market finally nears the launch of ETFs, it’s worth noting that actual demand for a spot BTC ETF at launch will likely be below expectations. This creates a classic ‘buy the rumor, sell the news’ scenario in the second week of the following month,” the analysts clarified.
In such a scenario Bitcoin would face resistance near $45,000–$48,500 and a possible retreat to around $36,000 before resuming its uptrend.
Nevertheless, QCP argues the crypto rally will continue as the market gears up for the forthcoming halving.
“Ethereum could also be an interesting ‘lagging play’, as investors’ expectations could quickly shift to spot ETH ETFs, potentially prompting some shifting from Bitcoin to the second-largest cryptocurrency,” the researchers noted.
In the view of the firm’s experts, the hype surrounding the launch of the product could spark a speculative lift in Ethereum’s price, regardless of whether it is justified.
In a podcast on 19 December, Coinbase’s head of institutional research David Duong and the exchange’s senior trader Greg Sutton highlighted two principal risks of a Bitcoin ETF.
First, the launch could strain liquidity on issuing platforms.
“You need to buy bitcoins in certain regulated venues. What if demand is so strong that these guys won’t be able to obtain the quantity of the asset they need?”
Duong acknowledged that this is a relatively positive problem compared with scant inflows of funds.
Second, there is a risk of a breakdown of the classic ‘basis trading’ strategy, which involves exploiting the divergence between the spot and futures price of Bitcoin contracts. This could occur due to imbalances in the market.
The SEC is reviewing 13 applications for a spot Bitcoin ETF. On June 15, BlackRock submitted the corresponding application to the regulator. Following the financial giant, similar requests were filed by Valkyrie, Fidelity Investments, WisdomTree and Invesco.
On August 31, the Commission postponed decisions on several Bitcoin ETFs to at least mid-October. In late September, the agency moved the consideration of the applications to January 2024.
In December, Bloomberg analyst James Seyffart also suggested that a spot Bitcoin ETF could be approved in January.
In the same month, Anthony Pompliano, co-founder of Morgan Creek Digital, warned that the ETF launch would not double Bitcoin’s price overnight.